Virtual cards operate like traditional credit cards but without the physical plastic. Instead, they provide a unique, single-use account number for a specific transaction with a designated supplier. These cards are securely and conveniently generated through an online automated payables platform.
Organizations of all sizes are realizing the substantial benefits of virtual cards, including increased control, heightened security, greater flexibility and improved efficiency in their payment processes. These advantages can also have a positive impact on the bottom line.
Here are the steps we recommend in considering — and potentially establishing — an automated payables program with virtual cards as the centerpiece.
1. Assess the opportunity.
Your payables system is crucial to your business, so changes require thoughtful evaluation. Start by mapping out your current processes and pinpointing areas where you could streamline and optimize. Next, consider how integrating virtual cards could amplify these efficiencies.
Virtual card programs offer more than just rebate opportunities. By transitioning from paper to electronic payments, you can enhance efficiency and gain float benefits. Additionally, virtual cards provide superior security compared to traditional paper payments. Consult with your bank’s treasury specialists to learn about these advantages and understand the process of easily converting suppliers to card payments.
2. Gain internal support.
Once your financial team identifies the benefits of a virtual card program for your organization, it’s crucial to secure buy-in from key stakeholders. Start by advocating to your executive leadership team, as their support is essential for large-scale changes.
You’ll also need to address concerns from departments like Procurement and Accounts Payable, which initially may be hesitant. Present the compelling case that emphasizes cost savings, increased security and other advantages, aligning these benefits with both the company's overall goals and their individual department priorities and constraints.
3. Partner with your bank on supplier enablement.
Getting suppliers to adopt a new payment method can be challenging sometimes, but your bank can assist in this transition.
For example, Hancock Whitney leverages the VISA® supplier matching service to identify which of your suppliers already accept card payments. These suppliers are an ideal starting point for your first supplier enablement campaign.
Our team is available to support you as needed, from reaching out to suppliers to demonstrating how virtual card payments can enhance their cash flow and reduce operational costs.
4. Grow the program.
Sustaining and growing virtual card usage requires ongoing effort.
If you frequently engage new suppliers, consider conducting annual supplier enablement campaigns. Our experts can assist in these campaigns, educating new and resistant suppliers about the benefits of accepting virtual card payments.
One effective strategy to incentivize suppliers is to offer faster payment terms. For example, you might negotiate a deal to pay a supplier in 30 days instead of 45 if they agree to accept virtual cards.
Virtual cards are useful and versatile for various expense types like online purchases, vendor payments, and travel and entertainment (T&E) expenses. If you’re interested in exploring the opportunities offered by an electronic payables system with virtual cards or want to reassess your current accounts payable strategies, please reach out to your banker or complete the form below and we'll be in contact with you.
Equal Housing Lender. All loans and accounts subject to credit approval. Terms and conditions apply.